WISDOM OF CROWDS: THE VALUE OF STOCK OPINIONS TRANSMITTED THROUGH SOCIAL MEDIA Flashcards
How do negative words in articles and comments on Seeking Alpha (SA) relate to future stock returns?
The fraction of negative words in SA articles and comments negatively predicts stock returns over the ensuing three months.
How do page views and article readership correlate with the historical consistency of SA authors?
Both page views and the number of times an article is read-to-end increase with the author’s historical level of consistency.
According to the paper, how do followers respond when SA authors’ articles have been inconsistent?
Evidence suggests that followers disagree with authors more when the authors’ articles have been inconsistent.
How does this paper’s findings regarding stock return predictability compare with other literature?
Contrary to other literature, this paper demonstrates that the stock return predictability documented is both statistically significant and economically meaningful.
How do readers potentially influence the quality of articles on SA?
Readers, through their interaction and comments, can help improve articles composed by historically inaccurate authors.
What are the key conclusions drawn by the authors regarding the predictive power of opinions shared on SA?
The opinions revealed on SA strongly predict future stock returns and earnings surprises, holding even after controlling for traditional advice sources, indicating the usefulness of peer-based advice in financial markets.
